Office of the State Treasurer

NEWS RELEASE

FOR IMMEDIATE RELEASE

CONTACT: Matt Golden

April 13, 2004

(609)
984-7110

Taxation
Agents Uncover Cigarette Trafficking Operation

TRENTON
- New Jersey Treasurer John E. McCormac announced today that special
agents from the Division of Taxation's Office of Criminal Investigation
recently seized 14,757 cartons of contraband cigarettes while arresting
Lan Zhang and Min Yu, both of Elmhurst, N.Y., on charges of violating
the New Jersey Cigarette Tax Act and possession of counterfeit trademark
products.

The seized contraband consisted of counterfeit Newport brand cigarettes
as well as illegally imported Chinese and British brands. Two Toyota
vans, which also contained Virginia-stamped cigarettes and over $550
in currency, were also confiscated. The contraband cigarettes were valued
at approximately $856,053, and the total averted tax loss to the State
of New Jersey was $353,881.

Taxation Director Robert K. Thompson explained that Zhang and Yu were
apprehended at the U-Store-It facility on Mallory Avenue in Jersey City,
N.J., as they loaded the vans with cases of counterfeit cigarettes on
April 7, 2004. The subjects had been observed removing the contraband
from a rented storage unit. Agents later discovered a second storage
area containing additional contraband cigarettes elsewhere on the premises.

The arrests resulted from an investigation of reported cigarette trafficking
in Hudson County. Forensic tests conducted by the Taxation agents at
the scene confirmed that the trademark holder, Lorrilard of Greensboro,
N.C., did not manufacture the Newport cigarettes.

Director Thompson credited the agents for their outstanding work and
for " protecting the interests of New Jersey taxpayers."
He added, "Our enforcement initiatives are many and ongoing. We
have enhanced our efforts toward combating this type of illegal activity
and are aggressively prosecuting those involved in the smuggling of
contraband cigarettes."

Both Zhang and Yu have been charged with possession and transportation
of the contraband cigarettes, operating without a license, failure to
produce invoices, failure to file reports with intent to evade the cigarette
tax, and possession of counterfeit trademark products.

Jersey City Municipal Judge Vincent Signoreli set cash bail at $100,000
for each defendant. Both subjects were processed and remanded to the
Hudson County Jail pending their first appearance before the court.